Saturday, April 30, 2016

I have made terrible calls on Gold Miners since February and have paid dearly, but I've only just realized that I identified the beginning of the run earlier while others hadn't. The wider market entered late driving GDX well past over-bought levels at a time when I thought a pull-back was appropriate and timely in order to develop and sustain a longer, healthier drawn out rise (sometimes this happens in the stock market, believe-it-or-not). Short positions by large commercial investors are at their highest in years and this fact can't be ignored. People are getting greedy at this point. It's still the very beginning of a long rise as faith in Central Bankers has steadily been eroded, but looking at the weekly chart our next and now most likely stop is about $26.25. This level will represent the resistance line for a long term downward channel and a level for highs put in back in February and August of 2014. At the rate we've been going this looks to be happening in the next week or two as the the weekly RSI(5) is hopelessly overbought and the RSI(14) just crossed 70.

Wednesday, April 27, 2016

Newmont Mining Corp upgraded as asset deals loom

Newmont Mining Corp. was upgraded to outperform from sector perform at RBC Capital Markets due to its strong free cash flow outlook and the potential sale of its Batu Hijau project in Indonesia. Analyst Stephen D. Walker, who raised his price target on the stock to US$40 from US$34, noted that while Newmont trades at a…

Sunday, April 24, 2016

Here are some of the charts people should be keeping an eye on in the coming week. A lot you will notice have ascending bearish wedges that have not completed there patterns, while others like Consumer Staples (XLP) have. Northman Trader has just posted an excellent summary of why the bullish case isn't supported by a lot of evidence at this stage, so look upon the following charts as further support.

Consumer Staples: XLP
XLP broke down three sessions ago and is coming up to it's first support at around $51.00. Momentum you will notice has fallen quite steeply so $51.00 looks like a good resting spot.

Real Estate: IYR
It took two and a half weeks and it wasn't a sharp change in direction but IYR finally fell and found support on the EMA(34). Strong support appears just above $75.00 and $74.00. This appear to be a good point to put in a lower high before continuing downwards.

Europe: VGK
Around Tuesday this week the European Index Fund VGK came up to resistance at around $50.50 while part of a bearish ascending wedge. Strong resistance is present at $51.50 and $52.00 so I don't see this going any higher. Furthermore, there are already two hits on the lower support line for the wedge so we may beginning the breakdown.

Finance: XLF
XLF continues to move strongly upward but resistance is going in around $24.00. At the moment it's filling a gap going back to January.

Healthcare: XLV
Healthcare normally traces Biotechnology quite closely, but lately Healthcare and XLV in particular has taken on a life of it's own. It's just had five up sessions in a row and finds itself inside a bearish ascending wedge with heavy resistance at $72.50.

Latin America: ILF
I don't normally report on Latin American Index ETF ILF but it too is in a large ascending bearish wedge having come up to resistance at around $26.50. The wedge already has two hits on the lower support line so this past week we may have already witnessed the beginning of a breakdown.

Russia: RSX
RSX is a strong short/sell having put in an ascending wedge for the better part of two months. Recently strong resistance appeared at $17.25 and $17.55.

Semiconductors: SMH
I haven't been a fan of SMH for almost three weeks now. The ascending wedge pattern has come and gone but EMA(13) and (34) are converging and support appears around $52.00.

Small Caps: IWM
IWM has been tearing it up lately but has nothing but resistance to look forward too. Our next pause should come at $115.00, however if I am wrong about the ascending wedge pattern we should see it rise to $118.00.

Technology: XLK
XLK broke down on Friday after experiencing several weeks of lateral movement. Support should appear at $42.00 and after that, $40.50, but after that I'm not sure what happens next!

Transportation: XTN
XTN has put in a beautiful ascending wedge that appears to be terminating at a resistance level of $47.50. Any downturn should see support at $44.50.

Treasuries: TLT
TLT is frightening - support is in at $127.00 however a descending triangle is being put in. Does this mean that a breakdown will be precipitated by bullish news from the Fed and Japan next week? Upper resistance is in at $131.50.

Volatility: VXX
I previously called a long/buy on VXX with support at $15.50 and upper resistance at $18.00 and $20.50.

A trio of Canadian law firms is seeking to certify a second class action lawsuit involving alleged manipulation of precious metals pricing over 15 years by large financial institutions including Bank of Nova Scotia. Lawyers at Sotos LLP, Koskie Minsky LLP and Camp Fiorante Matthews Mogerman, who filed a lawsuit in Ontario Superior Court of Justice…

Wednesday, April 20, 2016

I was ravaged with depression and guilt today when GDX was up 2.00% during the day, but in that particularly bipolar way that the market (and traders) tend to be I found it to be down 2.00% in the last five minutes. I still haven't figured out a reason or trigger for this fast transformation, but if we look at the daily GDX chart a significant rejection of the upper resistance line took place and the bearish ascending triangle is therefore still in play and may still come to pass. Don't forget that COT's put commercial shorts very strongly against gold and gold miners at the moment. Additionally a short/sell signal just went in on the RSI(5) indicator.

Tuesday, April 19, 2016

I'm very tired and haven't had a real day off in ten days so I'm just going to post some interesting charts. Things still appear very precariously positioned in the markets but I still have this sneaking suspicion that this is all just an intermediate pause as the markets will eventually turn higher again in a blow-off top (beautifully written about by NorthmanTrader.com in an article called "The Big Move"). Several stocks and index ETF's are putting in bearish ascending wedges at the moment so some of these should be taken advantage of.

Volatility: VXX
VXX had a shocking drop on Monday but then a bounce today off of the support line put in last year. A large bullish declining wedge is starting to go in and today looked like a good place to allocate capital on a reversal.

Small Cap: IWM
I haven't liked the look of it for a while but I made a bad call recently when IWM came up to the resistance line of the large red declining channel. Small Caps have continued to power on and after this small downturn I expect them to continue on (if the recent past is any guide).Biotechnology: XBI
Biotechnology had a poor day today as it appear to be completing a bearish ascending wedge. A sell signal has also gone in on the RSI(5) indicating at least a near-term down wave.

Semiconductors: SMH
This was one of my better sell signals that I made a few weeks ago. The move down so far hasn't been significant and I do not expect it to go much further (indicated by my proposed upward channel) but several signals continue to stay in place such as the RSI(5) and TRIX(9,5). Additionally today Intel announced layoffs of 11% of their workforce.

Monday, April 18, 2016

International Affairs:
Draghi to put ECB stimulus back on agenda after summer (Bloomberg)Brexit would lead to a 6% drop in the U.K., government warns (Wall Street Journal)
IMF downgrades global growth (again) (The Economist)

Business & Finance:
It's all suddenly going wrong in China's $3 trillion bond market (Bloomberg)
Last time the Saudi's opened the spigots the stock market crash and the Soviet Union fell (Financial Post)
Investors brace for volatility after botchedDoha deal (Financial Post)

Saturday, April 16, 2016

Even before OPEC officials descended on Doha, Qatar, this weekend to take another crack at lifting oil prices, the group had already achieved its short-term goal: propping up the price of oil. "Everything has played out exactly as OPEC sought," said Jon Morrison, a Calgary-based analyst at CIBC Capital Markets. "If you look at the price…

Friday, April 15, 2016

Canadian natural gas prices could surprise to the upside this year

A warm winter and ramped up production from the Marcellus shale formation in the U.S. Northeast have led to concerns that Canadian natural gas prices are set to go even lower. A new report from Raymond James, however, argues that outlook is too bearish. Natural gas storage levels are at their highest levels in years as…

Thursday, April 14, 2016

I posted this chart earlier in the week as UUP was making a bullish declining wedge. I extended the lines as much as possible out of fear that this whole process might be unnecessarily prolonged after all the press that oil and gold recoveries have received. It may still come to pass that UUP will breakout around $24.10, but yesterday there was a surprise jump in the U.S. dollar with UUP hitting the upper resistance line of the wedge. The breakout may be this morning or it might fall back some before ascending. A good long/buy signal has emerged on the RSI(5) with the full stochastic indicators crossing over along with the MACD and TRIX signal lines.

When the oil recovery comes, it won't look like anything the world has ever seen before

By now, we've all received the memo on distress in the oil and gas industry. Daily depressing blogs, news stories and Twitter feeds are diarizing the corporate carnage, project cancellations, idle oilfield activity and 100,000-plus layoffs. The cash drought is so severe, even the line-ups at Tim Hortons have subsided. That's what happens when $50 billion…

Tuesday, April 12, 2016

What can I say? Silver broke out today. Not only does this confirm Gold's (GLD) breakout, but now Silver (SLV) might enjoy the meteoric rise that Gold (GLD) has just undergone. Slope of Hope recently posted something interesting regarding a possible inverse head-and-shoulders pattern that I hadn't previously picked up, but since this pattern now seems confirmed we could see a rise to around $17.60.

Monday, April 11, 2016

Being right has disadvantages, very annoying ones, too. Like Barry Marshall who proved that bacteria cause stomach ulcers, or Robert Chambers who wrote about evolution before Darwin, or Hannes Alfven and his theories about galactic physics. The point is, these people all suffered ridicule for their ideas and were eventually exonerated, albeit not necessarily in their lifetime. But you're left wondering what happened when they were exonerated. Were people expecting them to make some further prolific pronouncement and lead them forth? No, they generally had some interesting world changing ideas but it kind of ends there. In the case of Robert Chambers, you may have made your point but you are still left with stomach ulcers and not much idea about what to do with them now that you have them.

This is the place I find myself now with Biotechnology (XBI). So far XBI has stayed beautifully within my unaltered channel and has been rejected by two important resistance lines. My Trix and stochastic indicator lines have begun to point downwards and I have long warned, oddly like Janet Yellen, that biotechnology was overvalued and needed to go down. It has started this journey, but now what? Will it make a lower low? Is this only the 'C' wave in a five wave ascent? I'm interested in knowing what other people think because unfortunately my ideas only got me this far and I'm not certain where it's trending next. I must admit, it's a nice bit of validation to have something follow my lines and patterns so closely but now that the ideas have run dry I'm getting ulcers think about what comes next!

Sunday, April 10, 2016

Markets:Consumer Stapes: XLP
Consumer Staples (XLP) is showing several strong sell signals on the RSI(5), is in a bearish declining wedge and is heavily over-bought on the MACD.

Real Estate: IYR
This is one of the most unhealthy charts I've seen in a while. IYR should be a strong short/sell. Sell signals abound on the RSI(5), TRIX, and MACD.

Financials: XLF
XLF was rejected by a resistance line about a week ago which initiated our sell/short signal and was later confirmed by an RSI(5) sell signal. I'm not sure where this is headed though.

Gold Miners: GDX
What can I say? My sell call recently was disastrous so I am calling an intermediate top at $22.30 to $23.00. Gold miners are still heavily over-bought and we need a breather at some point in the medium term.

Technology: XLK
XLK has come up on a long term resistance line and has also put in a bearish ascending wedge. A short/sell signal has appeared here on the RSI(5).

Volatility: VXX

I really like the look of VXX at the moment. We recently witnessed a (mixed) breakout from its declining bullish wedge.

Currencies:American Dollar: UUP
Uncle Buck has been in a bullish declining wedge for a while now and looks set to make moves in the next week or so. UUP is a long/buy but we do not have a clear signal on the RSI(5).

Australian Dollar: FXA
FXA has been punished lately which is hardly surprising given what a commodity heavy currency it is. We've seen a breakdown from one ascending bearish triangle which might produce a bounce at $74.50 but unfortunately I see nothing but more pain for the Dingo.

Commodities:Natural Gas: UNG
UNG seems to be putting in an ascending bullish triangle. I think Natural Gas is good here for at least a little run higher.

Gold: GLD
A bullish declining wedge was created which recently saw breakout. I'm not sure how much further this is going to go, but please be warned this looks like it's going to end in a little blow-off top before correcting back and retracing. There's a lot of small speculative money in gold right now and COT reports are showing a lot of institutional shorts developing.

Saturday, April 09, 2016

David Rosenberg: Why it's time to turn cautious on the markets

The two words that Janet Yellen emphasized in her seminal speech last week were "global" (11 references versus four at her February congressional testimony and just once in her last December speech ... just ahead of the you-know-what hitting the fan) and "uncertainty" (10 times, up from three citations in February and eight in December). So…

Thursday, April 07, 2016

Canada's oil dealmakers just had their best quarter in 20 years, but don't let the numbers fool you

Investors hungrily picked up share offerings of Canadian oil and gas companies in the first three months of the year, but the record-setting quarter hardly signals rising appetite for the troubled sector in the capital markets. 'Fragile five': These OPEC producers are on the verge of collapse if oil prices don't stabilize ‘There are five sovereign…

Wednesday, April 06, 2016

Semiconductors (SMH) and Small Caps (IWM) are putting in near-term sell signals on the RSI(5) at the moment, and this while they come to the end of some very long ascending bearish rising wedges. For Semiconductors this will be a fairly significant development as it will have failed to put in a higher high and Small-Caps have been stuck in a large descending channel for a long time. 38.2% retracement on the Small-Caps is $104.35 and $51.55 for the Semiconductors.

Tuesday, April 05, 2016

Volatility should rise at the starting bell, there's nothing really more to say than that. It's been in a bullish declining wedge for a long time. Yesterday it had a good day with VXX putting in a 2.63% ascent (not quite an engulfing bar), but just enough to begin poking it's head out of the declining resistance line. Upper resistance could be somewhere in the region of $22.50 which is the 38.2% Fibonacci retracement.

Why are these things happening? Several events took place last night which deserve a brief summary:

U.S. Treasury has said that tax inversion deals are all but dead, thus imperiling the Pfizer-Allergan deal.

Bank of Japan has reiterated the possibility of additional stimulus.

Decline in German factory orders.

Final PMI for Germany, Italy and the EU composite all missed.

UBS and HSBC dealings have been thrust into the spotlight after the release of the Panama Papers.

Monday, April 04, 2016

Business & Finance:Tesla rises after reservations for Model 3 top quarter million (Bloomberg)China jitters could trigger global market bloodbath, IMF warns (The Telegraph)

Commodities:Oil prices fall again as Iran backs away from production cuts (The Telegraph)
World's largest coal miner posts record haul as oversupply looms (Hellenic Shipping News)Oil dealmakers just had their best quarter in 20 years (Financial Post)

International Affairs:Panama Papers: Iceland PM faces no-confidence vote (Bloomberg)
Vote for Brexit would lead to 'implosion' of the continental bloc, warns LSE chief (The Telegraph)Greece ships 150 migrants back to Turkey (The Economist)

Sunday, April 03, 2016

In an effort to improve the depth and quantity of content on The Danja Zown I have decided to add a new segment involving currency markets. Many of the same concepts and patterns will be seen however the narrative may often be different and a little harder to develop when compared to the stock market.

Australian Dollar: FXA

The Dingo has had a fabulous run since the start of the year and I expect it to continue into the medium-term however near-term fundamentals and indicators are over-bought. An ascending bearish wedge has developed, possibly within another larger ascending bearish wedge, with the RSI(5) indicator putting in a sell signal.

American Dollar: UUP

The Buck has traded within a tight range for about a year now and once again we find ourselves at a common support area, $24.50. The tight range it has been in also looks to be putting in a descending channel which does not bode well for it's long term prospects. Near-term it appears to have put in a bullish declining wedge with upwards resistance at $25.00, $25.30, and $25.90.

Euro: FXE

Some interesting things seem to be happening with the Euro. First, it may appear to be in a bearish ascending wedge but it doesn't look or feel likes it's going to retrace. The EMA's have crossed over bullishly and it appears like it's going to start pulling away. Several upwards resistance lines are seen at $112.00 and $113.00 so caution should be made, especially since the one at $112.00 has served as a long-term resistance line in the past.

Japanese Yen: FXY

Not much can be said about the Yen except that a bullish flag has appeared right at the level of a huge gap down made back in November 2014.

Chinese Yuan: CYB

Over the long-term an ascending triangle has appeared which has quite bullish implications, however near term CYB has come up to resistance at $25.20 going back to October and November of last year. We might see a retracement to around $24.10 before seeing it ascend again.

Disclaimer:

Any views expressed in this Blog are those of the author. This Blog should be used for learning purposes only. The author cannot and does not accept liability for statements made in the Blog which are clearly the author’s own. All investment ideas discussed in this Blog may involve high risk and there is a possibility of a total loss, or that losses may exceed the amount invested. The author is not responsible for any loss or damage arising from or in connection with the use of any information from this Blog. Purple monkey dishwasher.